How To Afford To Stay Home With Your Kids

Source: Child Care Aware of America, IRS. Cult of Money estimate, before child care tax credits and employer benefits.

Talk With Your Partner First

The decision has to work for both of you. Before running numbers, agree on what you're both trying to achieve: how long one parent stays home, what happens when the kids start school, and how money decisions get made when only one person earns a paycheck.

Talk about the uncomfortable parts too. The working spouse carries more pressure, and the stay-at-home spouse gives up income, retirement savings and career momentum. Put both sides on the table now so neither person feels it was decided for them.

Save This Article

Email this article to yourself

We'll send you a link to "How To Afford To Stay Home With Your Kids" so you can read it later, plus The Weekly Ritual, our free newsletter. Unsubscribe anytime.

Email address

Email It To Me

Email me this article and sign me up for The Weekly Ritual. See our privacy policy.

Find Out What The Second Income Really Adds

The second income is worth less than its salary once you subtract what it costs to earn it. The table above shows how a $45,000 salary can shrink to about $17,700 with one child in care, or about $4,500 with two.

The national average price of child care was $13,184 in 2025, according to Child Care Aware of America, and infant care in some states costs more than $25,000 a year. Use your own numbers: your tax bracket, your local child care prices, and your commuting costs.

Then add back what the job provides beyond pay. Count the employer's 401(k) match, health insurance if it's the family's plan, and the child and dependent care credit.

Starting in 2026, the child and dependent care credit covers 50% of up to $6,000 in care costs for two or more children when adjusted gross income is $15,000 or less. The rate drops one point for each $2,000 of AGI above $15,000 until it reaches 35% at about $43,000, according to section 70405 of the 2025 tax law. It stays at 35% up to $75,000 of AGI, or $150,000 for joint filers, then drops again toward a 20% floor. A dependent care FSA through work can also shelter up to $7,500 of child care costs from tax in 2026.

Practice Living On One Income

The safest way to test the plan is to live on one income for six months to a year before you quit, and save every dollar of the second paycheck. If you can do it without new debt, you know the budget works. You'll also have a cushion when you leave the job.

Set a timeline, and focus on spending less rather than working more hours, since that's rarely realistic with a new baby. Our page on what it really costs to raise a kid helps you budget for the costs that keep coming once the baby arrives.

Cut Your Biggest Expenses

The fastest savings come from the largest budget lines: housing, food, transportation, phone and internet, and debt.

Housing. Housing is usually the largest expense and the hardest to cut. Options include moving somewhere cheaper, renting out a room, or refinancing a mortgage if current rates are below yours. Our page on refinancing your mortgage covers when that pays.

Food. Grocery spending is easy to trim with a weekly meal plan and fewer trips to the store. See how to spend less on groceries.

Phone, internet and subscriptions. Call your providers and ask for a lower rate, or switch to a prepaid carrier. Cancel subscriptions you don't use.

Debt. With less income, debt payments take a larger share of the budget. Three steps help:

• Sell a car with a large payment and replace it with a cheaper one, ideally with no loan.
• Call your credit card companies and ask for a lower interest rate. They don't always say yes, but it costs nothing to ask.
• Stop adding new debt while you're preparing to leave work.

Protect The Stay-At-Home Parent's Future

Staying home has long-term costs that don't show up in the monthly budget. Plan for them now.

Retirement savings. A spousal IRA lets a married couple filing jointly contribute to an IRA for a spouse with little or no earned income, based on the working spouse's earnings. The 2026 limit is $7,500, or $8,600 at age 50 or older, according to the IRS.

Social Security. US workers need 40 credits to qualify for their own retirement benefit, and in 2026 each credit takes $1,890 of covered earnings, up to four credits a year, according to the Social Security Administration. Earning $7,560 in a year from part-time or self-employment work earns the full four credits. A spouse can also claim up to 50% of the working spouse's full benefit.

Life and disability insurance. If the family runs on one paycheck, insure it. Our page on reasons to get life insurance covers how much coverage to consider. The stay-at-home parent needs coverage too, since replacing child care and household work would cost real money.

Outside the US. Other countries have their own protections. In the UK, a parent who claims Child Benefit for a child under 12 gets National Insurance credits toward the State Pension, according to GOV.UK, even if the family's income means the benefit itself is paid back through tax.

Bring In Some Income From Home

A few hundred dollars a month from home-based work can close the difference between one income and your budget. Freelance writing, design, bookkeeping, tutoring and pet or child care are common options. Before you quit, read our page on what to consider before quitting your day job.

What About Crypto Income?

Staking rewards, airdrops and trading gains get promoted as "passive income," but they aren't a reliable replacement for a paycheck. Crypto prices can fall 50% or more in a few months, and staking yields fall with them in dollar terms. If you hold crypto, count it as a long-term asset, not as monthly income, and keep your bills covered by cash.

Work Part Time Instead

If quitting outright doesn't add up, part-time work is a middle path. Fewer hours can mean less child care, more time at home, and you keep some income, Social Security credits and possibly benefits. Ask your employer about reduced hours or a job share before you resign.

What To Watch Out For

• Losing health insurance. If your job provides the family's coverage, price a replacement before you quit.
• Time out of the workforce. Keep skills and contacts current so returning to work is easier.
• One-income risk. A layoff or illness for the working spouse hits harder. Build a larger emergency fund, six months or more.
• Retirement shortfall. Years without contributions add up. Use a spousal IRA every year you can.

Update

Alexa wanted badly to stay home when her first daughter was born, and it didn't work out. By the time she wrote this in 2016, she'd set her finances up so that staying home with future children would be an easy choice. Her closing advice still stands: if it doesn't happen now, don't beat yourself up, keep improving your finances, and know your kids will grow into happy, capable people either way. The Cult of Money editors added current child care costs, the 2026 tax rules and steps to protect the stay-at-home parent's retirement.

FAQ

How Much Money Do You Need To Stay Home With Your Kids?

You need enough for your household to live on one income with no new debt, plus an emergency fund of at least six months of expenses. The best test is to live on one income for six months while saving the second paycheck.

Is It Cheaper To Stay Home Than Pay For Daycare?

It can be. With the 2025 US average child care price of $13,184 per child, a second earner with two children in care may net only a few thousand dollars a year after taxes and work costs. Run your own numbers, and include lost retirement matches and benefits.

Can A Stay-At-Home Parent Contribute To An IRA?

Yes. A married couple filing jointly can contribute up to $7,500 in 2026 to a spousal IRA for a non-working spouse, as long as the working spouse earns at least as much as the couple contributes.

Does Staying Home Affect Social Security?

In the US, you stop earning your own Social Security credits when you stop working. You can still qualify for a spousal benefit of up to 50% of your spouse's full benefit, and part-time earnings of $7,560 in 2026 earn a full year of credits.

Should I Count On Crypto Income To Stay Home?

No. Crypto prices and staking rewards are too volatile to cover fixed bills. Treat crypto as a long-term holding, separate from the money you need to live on.